MOH Lost 25% In A Month. Do You Buy Or Wait?
Molina Healthcare (MOH) stock is down 24.9% in 21 trading days. The stock looks attractive, but the history suggests it has a hard time recovering within a year following large dips. Consider the following data:
- Size: A $8.6 Bil company with $42 Bil in revenue currently trading at $161.21.
- Fundamentals: Last 12 month revenue growth of 16.8% and operating margin of 4.1%.
- Liquidity: Has Debt to Equity ratio of 0.4 and Cash to Assets ratio of 0.6
- Valuation: Currently trading at P/E multiple of 7.3 and P/EBIT multiple of 5.0
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned -23% within a year. See MOH Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for MOH, see Buy or Sell MOH Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and MOH drops another 20-30% to $112.85 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Molina Healthcare (MOH) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: MOH provides managed health care services to low-income families and individuals through Medicaid, Medicare, and government programs across 18 states, serving over 5 million members.
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2022 Inflation Shock
- MOH stock fell 29.4% from a high of $369.23 on 26 October 2022 to $260.64 on 15 March 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 12 December 2023
- Since then, the stock increased to a high of $419.53 on 19 March 2024 , and currently trades at $161.21
| MOH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -29.4% | -25.4% |
| Time to Full Recovery | 272 days | 464 days |
2020 Covid Pandemic
- MOH stock fell 29.9% from a high of $153.84 on 19 February 2020 to $107.79 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 April 2020
| MOH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -29.9% | -33.9% |
| Time to Full Recovery | 16 days | 148 days |
2018 Correction
- MOH stock fell 30.8% from a high of $155.28 on 6 June 2019 to $107.47 on 27 September 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 April 2020
| MOH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -30.8% | -19.8% |
| Time to Full Recovery | 194 days | 120 days |
2008 Global Financial Crisis
- MOH stock fell 59.0% from a high of $27.22 on 24 December 2007 to $11.17 on 12 December 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 April 2011
| MOH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -59.0% | -56.8% |
| Time to Full Recovery | 843 days | 1480 days |
Worried that MOH could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.